Good Health and Medicare Opt-Out for Physical Therapists. Elvonda

Representative Vern Buchanan
Washington D.C. Office
2104 Rayburn HOB
Washington, D.C. 20515
Phone: (202) 225-5015
Fax: (202) 226-0828

February 4th, 2013

Tim Richardson, PT

Re: A non-regulatory solution that will save Medicare $957,600 per year

Dear Rep. Buchanan,

Thank you for the opportunity to describe this proposal for a non-regulatory solution that may save Medicare hundreds of thousands and, perhaps, millions of dollars per year.

Medicare beneficiaries currently are not allowed to privately contract with physical therapists for the provision of physical therapy services in the United States. According to the American Physical Therapy Association (APTA):

�If a physical therapist accepts payment directly from a patient for a covered service under Medicare, he or she could be subject to federal investigation and financial and other penalties.�

However, Medicare beneficiaries are demanding more physical therapy services every year. Private practice physical therapy is growing faster even than the overall growth rate of the Medicare program (~8%).

From 2004 to 2009 private practice physical therapy grew at an average annual growth rate of 10%.3

However, many private practice physical therapists would prefer to see these patients without the administrative burden associated with the Medicare program. Title 42, Part 405 of the Code of Federal Regulations lists the regulations that permit a physician or practitioner to opt out of Medicare and enter into private contracts with Medicare beneficiaries, if specific requirements of these instructions are met.

Physical Therapists are not included on this list of physicians and non-physician practitioners who may opt-out of the Medicare program:

Physician assistant
Nurse practitioner
Clinical nurse specialist
Certified registered nurse anesthetist
Certified nurse midwife
Clinical psychologist
Clinical social worker
Registered dietitian
Nutrition professional

Spending on therapy services, specifically physical therapy, is growing at an alarming rate from the perspective of government payment policy experts. Medicare spent nearly $6 billion dollars on all outpatient therapy in 2012 or about $1,173 for each Medicare beneficiary treated.

Reimbursement to physical therapists, however, is the opposite side of the spending coin. Many private practice owners see Medicare reimbursements as flat or declining and, with the uncertainty of the outcome of the Congress� eminent Fiscal Cliff deliberations, would like to explore alternative business arrangements with their patients.

There are over 177,000 licensed physical therapists in the United States and an estimated 65,000 work in private practice settings. Private practices physical therapists are small businesspeople who would be the most likely practicioners to opt-out of the Medicare program. Many would prefer to seek private contracting arrangements with Medicare beneficiaries, if allowed to do so.

Recent, anecdotal reports of physical therapists in private, cash-pay practice place their annual revenues at about $150,000 for a full-time therapist treating non-Medicare patients. In contrast, a typical collections experience for a Medicare Physical Therapist in Private Practice (PTPP) is about $250,000 per year. However, much of this Medicare revenue goes to support administrative overhead, not to pay the therapist.

We can estimate Medicare�s cost savings if physical therapists are allowed to contract privately with Medicare beneficiaries. The aggregate Medicare spending for the PTPP outpatient setting in 2011 was $228 million.

According to the Private Practice Section of the American Physical Therapy Association:

�...very few physicians have exercised this opt out affidavit. From 1998-2002, 2839 physicians, clinical psychologists, and other providers chose to opt-out. This represents 0.42 percent of the physicians and other providers eligible to opt-out.�

A conservative estimate of Medicare savings is $957,600 per year.

We understand this amount may seem trivial in the face of the enormous challenge before the Congress. However, there should be essentially no opposition or special interest group against a request from Representative Buchanan to the Centers for Medicare and Medicaid Services to include physical therapists in the list of physicians and non-physician practitioners who may opt-out of the Medicare program in Title 42, Part 405 of the Code of Federal Regulations.

To accomplish this change, we recommend that Section 1802(b)(5)(B) of the Social Security Act be amended as follows: Section 1802(b)(5)(B) (42 U.S.C. 1395a(b)(5)(C)) is amended by striking ``the term practitioner has the meaning given such term by section 1842(b)(18)(C)� and inserting �In this subparagraph, the term �practitioner� means an individual defined at section 1842(b)(18)(C) or an individual who is qualified as a physical therapist.�

The ultimate solution, or solutions, to our nation�s fiscal challenge may include multiple, moderate money-saving strategies. We hope that this proposal for saving Medicare money is one that Representative Buchanan can consider.

Thank you for your time and attention,

Tim Richardson, PT

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